A nonbank can only hold underwater non-QMs for so long until a decision needs to be made. In the case of Angel Oak, it decided to sell roughly $350 million of product at a steep discount of 83 cents on the dollar.

Investors are being quite choosy these days when it comes to debt service coverage loans. But perhaps that's a buying opportunity for those with a strong stomach.

The Mortgage Industry Standards Maintenance Organization has released a standardized template to facilitate the bidding process for MBS between mortgage originators and dealers for Bids Wanted in Competition.